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Bowman v. Country Preferred Ins. Co.

United States District Court, D. Arizona

March 31, 2015

Catherine Bowman, Plaintiff,
Country Preferred Ins. Co., Defendant.


STEPHEN M. McNAMEE, Senior District Judge.

Pending before the Court is Defendant Country Preferred Insurance Company's ("Country") motion for summary judgment. (Doc. 62.) The motion is fully briefed. (Docs. 80; 82.) Having reviewed the parties' briefing, the Court will deny Country's motion.

I. Factual and Procedural Background

This[1] first-party underinsured motorist ("UIM") bad faith action arises out of a car accident that occurred in 2009. Plaintiff Catherine Bowman's ("Bowman") vehicle was hit by a vehicle driven by Johnny Goodwyn ("Goodwyn") after Goodwyn ran a red light. (Doc. 1 at 7.) Both Bowman and Goodwyn were insured by Country. (Doc. 1 at 6, 11.) Goodwyn had a liability policy with $100, 000 limits; Bowman had UIM coverage with $250, 000 limits. (Id.)

The day after the accident, June 26, 2009, Bowman contacted Country and informed Diane Carrigan, a Country claims representative, that she suffered from stiffness in her body and planned to visit a physical therapist. (Doc. 81-6 at 6, 26.) Later that day, Carrigan noted that "Catherine was injured in this accident and will be making a bodily injury claim." (Doc. 81-1 at 31.)

A few days later, Barry Janckes, the Country claims representative for Goodwyn, informed Bowman that Country had accepted liability for the crash. (Docs. 1 at 12; 81-1 at 2.) Near the end of July 2009, Country paid for the damage to Bowman's vehicle. (Doc. 63 at 9.)

Over the next two years, Bowman's claim remained dormant, with only periodic calls or letters between Country and Bowman. (Docs. 63-1 at 31; 81-1 at 54.) Then, on June 7, 2011, -19 days before the statute of limitation expired-Bowman hand delivered a "demand package" to Country alleging that she suffered from thoracic outlet syndrome ("TOS"), cracked teeth, and a number of other injuries as a result of the accident. (Doc. 81-2 at 7-42.) The claim also included medical opinions confirming the existence of Bowman's alleged injuries and causation testimony from two vascular surgeons (Doc. 81-5 at 49, 50), a report from Susan Sorosky, P's treating M.D., (Doc. 81-4 at 2-8), a report from certified neuromuscular massage therapist ("NMT")(Doc. 81-4 at 10-11), and the findings from Dr. Hurt, Bowman's dentist (Doc. 81-3 at 65-66). (See Doc. 81-2 at 17.), Soon after, Bowman filed a third-party action against Goodwyn in Superior Court. (Doc. 63 at 15.)

On August 9, 2011, Bowman allegedly called Country to inquire about the status of the first party UIM claim, and was asked for further medical authorization so that Country "[could] begin the evaluation of the underinsured motorist claim." (Doc. 81-1 at 35.) The next day, Bowman sent additional information and authorization to Country. (Doc. 63 at 19.) Three weeks later, Carrigan informed Bowman that the records review was complete, and that the claim would be sent to a review team. (Doc. 81-1 at 36.) Carrigan also indicated that Country would "likely" request an independent medical exam ("IME") shortly following the records review. (Id.)

On September 6, 2011, Carrigan extended a $10, 000 offer to Bowman in an effort to settle the UIM claim. (Doc. 81-1 at 28.) The claim notes do not indicate Carrigan's reasoning for the offer amount. (Doc. 81-1 at 26-29.) Bowman rejected the offer. (Id.) The next day, Carrigan sent a letter to Dr. Sorosky inquiring about Bowman's alleged TOS. (Doc. 81-4 at 2.) Dr. Sorosky responded that it was her opinion that Bowman's TOS was related to injuries sustained in the June 2009 car accident. (Doc. 81-4 at 4.)

On September 22, 2011, Carrigan informed Bowman that Country would include her dental costs in the claim, confirmed receipt of the additional reports from Dr. Sorosky and the NMT, and indicated that Country would have an independent medical records review performed to evaluate the records. (Doc. 81-1 at 39.) Carrigan retired the following day and the UIM claim was transferred to Country claims representative Leslie Sinatra. (Id.)

On September 27, 2011, Sinatra informed Bowman that Carrigan had not forwarded the materials for an independent medical records review, and that the review would require more time. (Doc. 81-1 at 40.)

On October 4, 2011, Bowman notified Country that she would demand arbitration if the UIM claim were not resolved by October 18, 2011. (Doc. 81-2 at 44-45.) After learning of the impending arbitration, Jim Shaffer, Country Claims attorney responsible for the Goodwyn action pending in Superior Court, instructed Sinatra to forward the UIM claim to him. (Docs. 81-1 at 48; 81-1 at 54.) After turning the claim over to Shaffer, Sinatra informed Bowman that Country "did not have enough prior records to appropriately evaluate the causation issues..." and that the claim would proceed to arbitration. (Doc. 81-1 at 44.) Bowman asked Sinatra to identify which medical documents were missing, but Sinatra responded that the claim now fell under the purview of Country's litigation team. (Doc. 81-1 at 43.)

After receiving the file, Shaffer contacted Steve Venezia, outside counsel contracted to represent the Goodwyns in the Superior Court case, to talk about an "interesting development" in the claim. (Doc. 63-3 at 6.) Shaffer asked Venezia if he would handle both claims, reasoning that Country could "simply resolve both claims in arbitration with the [bodily injury] limits ahead of the UIM limits." (Id.) Shaffer explained further that "[i]f the award is over the [bodily injury] limit, then we simply pay the remaining amount under UIM, without the concern for an excess verdict." (Doc. 63-3 at 6.) Venezia responded that he did not see a conflict. (Doc. 81-1 at 49.)

Venezia thereafter assumed responsibility as counsel for both the UIM and third party claim. (Id.) As defense counsel for both claims, Venezia denied coverage on the third-party claim on November 4, 2011, based on a sudden incapacitation defense. (Doc. 81-4 at 63, ¶ 23.)

On December 7, 2011, Bowman complained to Shafer about the joining of her claims. (Doc. 81-2 at 56-59.) A few days later, Douglas Hundman, Country Claims Supervising Attorney, informed Bowman that Pete Bangay (claims representative) and Paul McGoldrick (attorney) would continue with the UIM claim, and Kristi Lewis (claims representative) and Tom Burke (replaced by David Matheson) (attorney) would be handling the Goodwyn case. (Doc. 81-1 at 54). Hundman also acknowledged that Country did not notify Bowman that liability had been in dispute and that Country had become aware of the potential for a liability defense from a letter Country had received from Bowman in May, 2011. (Id.)

On January 20, 2012, McGoldrick met with Bangay and decided to forgo the sudden incapacity defense raised by Venezia and re-admit liability. (Doc. 81-3 at 9.) Notes from that meeting provide: "Maybe in [bad faith] claim down the road to minimize exposure. Admit Liab." (Doc. 81-3 at 8.)

Later that day, McGoldrick notified Bowman that Country would not contest liability on the UIM claim and the arbitration would proceed on causation and damages only. (Doc. 81-3 at 7.)

On January 23, 2012, Matheson offered the $100, 000 policy limits in the Goodwyn case. (Docs. 81-3 at 9; 81-4 at 65, ¶¶ 33-34.) Bowman accepted the settlement, but retained her right to pursue payment and a bad faith action for the UIM claim. (Doc. 63-4 at 4.)

By March 2012, McGoldrick had arranged to submit Bowman to an IME performed by Dr. Brown. (Doc. 81-3 at 32-34.) On March 23, McGoldrick sent Dr. Brown Bowman's medical records, noting that "the primary issue in the case is the causal relation of the [TOS] to the accident, the treatment for this condition..., and whether this condition impacts the ability of Ms. Bowman to work." (Id. at 33.) Dr. Brown performed the IME on March 27. (Doc. 63-5 at 14.) In his report, he indicated that he found "no evidence this patient developed thoracic outlet syndrome as a result of the... accident" primarily because the "onset of symptoms [was] not consistent with the diagnosis of TOS...." (Id.) ...

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